Shares in Alibaba and Suning jump after co-operation deal

http://www.bbc.co.uk/news/business-33858342

Version 0 of 1.

Alibaba and Suning stocks jumped on news the Chinese online giant will take a major stake in the offline retailer.

Alibaba is the world's largest online marketplace while Suning is a China-wide chain of electronics stores.

Alibaba's shares rose more than 2% overnight on Wall Street while stocks in Shenzhen-listed Suning surged to the maximum 10% limit on Tuesday.

The firms plan to link their online and offline models, so customers could see goods in Suning stores then buy online.

Under the deal, Suning will also open an online store on one of Alibaba's shopping websites.

'A new commerce model'

The deal will see Alibaba investing 28.3bn Chinese yuan (£2.9bn; $4.6 billion) in Suning, making it the second largest shareholder with almost 20%.

Suning will in turn invest 14bn yuan to acquire a 1.1% stake in Alibaba.

In a statement, the two companies said the partnership would combine the strengths of online and offline commerce.

"Over the past two decades, e-commerce has become an inextricable part of the lives of Chinese consumers, and this new alliance brings forth a new commerce model that fully integrates online and offline," Alibaba CEO Jack Ma said.

The firms said that customers could, for example, go into one of Suning's 1,600 shops to try out a product before buying it online on Alibaba's website.

Goods could then be delivered in as little as two hours through Suning's existing logistics network, spanning most of China with distribution centres and delivery stations.

Mr Ma seeks to diversify New York-listed Alibaba as it faces increasing domestic competition from fellow online giants Baidu and Tencent.

Two weeks ago Alibaba said it would invest $1bn in its cloud computing business to increase its international presence.

In June, the company launched an online bank aimed at serving smaller businesses struggling to obtain credit from large banks.